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Volume 2017 - Number 20

May 26, 2017

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Banking Industry Upped Its MBS Holdings In 1Q17, With a Boost From Large Thrifts

The banking industry again boosted its holdings of single-family MBS during the first quarter of 2017, although results varied significantly among various major players in the market. Banks and thrifts reported $1.762 trillion in held-to-maturity and available-for-sale MBS as of the end of March, a 1.5 percent increase from the previous quarter, according to a new Inside MBS & ABS ranking and analysis of bank call reports. With Federal Reserve MBS purchases in a holding pattern, banks and other investors are in a better position to increase their holdings as the supply of agency MBS slowly grows. The industry held...[Includes two data tables]

SFIG Aims for Trump Administration Support on Plans To Lessen Regulatory Burdens on MBS and ABS Market

Recent remarks by Craig Phillips, counselor to the secretary of the Treasury Department, suggest that the Trump administration supports proposals to reduce regulatory burdens in the MBS and ABS markets. The agency is in the process of finding regulations that can be “clarified, modified or tailored” to help boost the housing market. “We believe it’s time to assess whether regulatory requirements have unnecessarily tightened the credit box for new originations,” Phillips said at a credit-risk transfer symposium in New York City. “Regulatory requirements have also contributed to increased cost in servicing. Capital and liquidity standards have put private-label securitization at a disadvantage.” The Structured Finance Industry Group noted...

Investors Cool to Commercial MBS Market Because Of Lack of Clarity on Risk-Retention Requirements

Issuers of commercial MBS are facing significant problems with risk-retention requirements five months after the rule took effect, according to an industry attorney. Industry participants continue to push for guidance from federal regulators, but the response so far has been limited. “The rule is woefully inadequate as a guidebook for compliance, with massive white space, periodically interrupted by obscure bubbles of facial clarity,” according to Rick Jones, a partner at the Dechert law firm. “Unclear rules and potentially existential liability are not the stuff of a deal easily made.” In a recent commentary, Jones said...

Angel Oak Hopes to Securitize at Least Quarterly; Citadel’s First MBS May Come Late this Summer

Two of the most active nonprime originators operating today may be headed in different directions when it comes to securitizing the non-qualified mortgages they’ve been originating. An official at the Angel Oak Companies told Inside MBS & ABS this week that the lender hopes to securitize at least once a quarter “going forward.” Citadel Servicing Corp., Irvine, CA, had hoped to issue its first security either late this month or in June, but appears to be pushing back its timetable. Dan Perl, CEO and founder of Citadel, declined...

The Fed’s Purchase of Agency MBS is Likely to Continue, Current and Former Officials Suggest

A new working paper from University of California at Irvine economics professor Eric Swanson suggests the U.S. central bank’s bond buying activities will continue, to one extent or another, perhaps indefinitely. The reason? What the Federal Reserve did in the wake of the financial crisis produced longer-lasting results than what it said. Swanson, a former researcher at the Federal Reserve Bank of San Francisco, said both the Fed’s Open Market Committee guidance on the likely future path of the federal funds rate and its large-scale asset purchases (LSAPs) have had positive effects. The goal of both policies was...

Ginnie Ranks Second in MBS Issuance, Has Scores Of Investors Overseas and No Permanent President

Mortgage bankers – as well as MBS investors – are starting to get a little nervous that Ginnie Mae still doesn’t have a new president, though an announcement on the post could come in the next few weeks. Industry officials who claim to have knowledge of the selection process maintain that mortgage banker David Kittle, president of the Mortgage Collaborative, is the leading candidate to fill the post. Michael Bright, a director at the Milken Institute, is a close second. One source close to the situation claimed...

NY Court Requires Higher Burden of Proof in Ambac MBS Case; Deutsche Bank Holds Former Execs Liable

A Manhattan appeals court raised the burden of proof for Ambac Assurance, which seeks to recover monetary damages from Bank of America in an insurance case involving $1.68 billion in securities backed by high-risk mortgages from now-defunct Countrywide Home Loans. Attorneys with Shepherd Smith Edwards & Kantas said a panel of the Appellate Division, First Judicial Department, ruled that Ambac may not use New York insurance law as the sole basis for arguing that it does not have to prove certain elements of fraud in its claims against BofA. The court also barred Ambac from using the statute to recover damages. The court held...

Latest Deals Show Market Acceptance of Freddie And Fannie Re-performing Loan Programs

Fannie Mae and Freddie Mac both announced new re-performing loan sale transactions this month as the two government-sponsored enterprises look for ways to shed illiquid assets. Fannie began marketing its first re-performing loan sale back in November to help reduce its balance sheet. The program continues to gain more traction with each sale. That first sale totaled $789.2 million in unpaid principal balance. Fannie has since announced...

Wells Fargo Analysis Examines GSE Insurance Credit-Risk Transfer, ACIS Larger than CIRT

Insurance policies are the second-largest form of the government-sponsored enterprises’ credit-risk transfer but Fannie Mae’s Credit Insurance Risk Transfer (CIRT) program and Freddie Mac’s Agency Credit Insurance Structure (ACIS) have a few stark differences. One of the primary differences in the two is that Freddie has retained large portions of the tranches from its popular Structured Avenue Credit Risk deals (STACR), and used the ACIS program as a way to transfer some of the remaining risk, up to the 5 percent retention limit, note analysts at Wells Fargo Securities in a recent report. With ACIS coverage tied to companion STACR deals, it’s...

MBS & ABS Issuance at a Glance

One page of issuance data.

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